Overall, Property is still a great investment in 2022. This is because while markets fluctuate the need for homes continues to climb. However, the current trend for buying properties in need of renovation for a low price, renovating them and then flipping them for a profit may not be the path to riches many expect. Indeed, while some lucky and super savvy individuals make a killing from flipping property, many others are left with an investment that has cost them a huge amount but doesn’t offer a healthy return. Put simply, flipping properties is very risky! However, the good news is that there is another option for real estate investors, and it’s leasing out their properties and earning an income over the longer term. Keep reading to find out all the reasons why this is a great idea in today’s market.
You need less capital to get started
Compare the costs of buying, renovating, and then selling a property, to buying one and then renting it out. The latter option requires much less capital because extensive renovations can cost anything upwards of $30,000 and that’s as long as there are no major issues like rooves that need to be fixed.
Indeed, even if you find yourself in the position where you need to spruce up a rental property the finish required will not be as high as if you were reselling. Of course, that means buying to rent can be a more accessible and realistic choice for those just begging in the investment market.
Rental costs go up as inflation does
Another major benefit of buying to rent rather than buying to flip a house is that the amount you charge your tenants can be increased each year. That means as time goes on you can expect to earn even more each month from your original investment.
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Additionally, because of this increase, any increase in fees you may have to pay out for during your ownership, including property management and repairs should be covered as well. Thereby protecting your income and profits.
You have access to a stable and passive income
What many people don’t realize is just how much work is involved in flipping a house. This is because flipping often requires any renovation work to be completed as quickly and as cheaply as possible. Therefore, investors can find themselves DIY work on a very short timescale, something that can make it impossible for them to work at their regular jobs, or cause delays and possibly losses when the property does come to market.
Instead by choosing to lease out your property, you will not only have access to stable monthly income, but you can hand off the responsibility of managing it as well. Indeed, by finding a team like the one at The Realty Medics that specialize in property management you can leave everything from finding vetted tenants to inspections and repairs and maintenance to the experts. Thereby ensuring both a stable income, with as little work for you as possible.
You can use your rental income to access more profit over the long term
Of course, the monthly income you can expect from leasing a property can’t compare to the large lump sum you could make from flipping it. Although, it is worth bearing in mind that vast profits are not guaranteed when flipping a home.
Additionally, many people prefer to lease a property because they can then use the income gained from that to pay off the mortgage while at the same time. The best-case scenarios are that the property both grows in value, and they have greater access to any profits when they do decide to sell because they own a larger share of the property by that time.
Your investment is taken care of by the tenant
Last of all, renting your property instead of flipping it can be a much less risky option because you have built-in protection in the form of your tenant. Yes, that’s right as long as you get your tenants well before you sign a contract with them, you can expect them to take care of your property, lowering the risk of break-ins, vandalization, and even squatting. All while you collect their rent, and play the long game as your investment grows in value.
Final thoughts
Although flipping properties has become popular over the last few years, there are many valuable benefits to buying let to consider as well. Indeed, if you are looking to make a significant return on your investment over the long term then leasing your property could be a much less risky option.
